Fortress Investment Group Was Bought By SoftBank – But Why?

Without investments, the value of people’s earnings would consistently drop over the years due to inflation. They’d also have to worry about where to reliably store their money – savings accounts would collectively be filled to the proverbial brim. Thankfully, we do have investments, another name for vehicles that store money and are used to generate more money for their owners.

Most people choose conservative investments that carry low risk and reasonable returns. These returns beat out inflation by a few points, though they’re highly unlikely to earn their owners any substantial amounts of money. However, a small portion of investors – both business- and personal-use investors – turn to alternative asset management companies to generate higher returns on their investments, though they often tote along larger risks than their safer, more boring counterparts.

Fortress Investment Group is an alternative asset management firm based in New York City that helps roughly 2,000 individuals and businesses earn extraordinarily high returns without having to invest in instruments that aren’t likely to yield anything of value – take junk bonds, for example. The company was created in 1998 by a trio of business partners: Wesley “Wes” Edens, Robert “Rob” Kauffman, and Randal “Randy” Nardone.

Fortress Investment Group currently has about $40 billion of assets under management that its 1,800-odd investors trust with the firm. Just last year – in July 2017 – Fortress Investment Group was bought out by an international business conglomerate that doesn’t often invest in opportunities outside of technology and the World Wide Web.

SoftBank Group Corporation bought out Fortress Investment Group for this simple reason

SoftBank of Japan gave $3.3 billion to the owners of Fortress in July 2017. SoftBank forked over roughly 40 percentage points’ worth of premium on its share prices at the time, effectively paying shareholders roughly $8 per share due to the transfer of ownership.

Here’s why SoftBank bought Fortress Investment Group – because it showed promise, for one, and the two companies agreed that Fortress would be run independently of SoftBank, a move that cut the number of employees who would have to work on nothing but the management of Fortress to zero.